A few questions regarding tax and centrelink

[andrew0123]

Hi guys. I am starting to make a profit over what i'm allowed to earn on my DSP; i'm on a centrelink disability pension and am preparing to hand in all the relevant forms. I am going to get an ABN, report every 3 months, fill in a tax return and centrelink forms. Do you guys have any general advice? 

An accountant is a possibility but I also have some questions - I have receipts from online banking for petrol from 2014 when i found items in hard rubbish. These items were listed online from mid 2019. Some have sold and some are still listed online. Can I claim petrol deductions from online bank receipts and do i have to wait for each item to sell before I can claim? How do i calculate deductions when i have thousands of vastly different items and different travel times? I also buy and sell from op shops, cash converters and never kept physical receipts, but payed for most with online banking? I had never tracked any of this stuff until 2019 when i decided to sell it. 

Also, how do i value these items? Can i value the stock based on how much i got it for? (cost of petrol/ car expenses only?) - how far back can i claim deductions? Can i value this at market price and claim a deduction based on it's value or cost to find or buy? 

I also have plenty of childhood football cards I want to sell which I payed quite a bit for as a kid - all my pocket money and I may not make a profit (no evidence or receipts of these purchases other than my brother/ parents vouching for it).  Can I claim any of this?

Do deductions have to directly relate to a sold item. for example. If i found 100 items in hard rubbish and spent $4500 in petrol, can i claim all the petrol in the first year's profit and loss? 

Also, with the balance sheet for inventory - I have my stock at very inflated prices because I’m not really ready to sell it. My overall inventory price is much higher than what it is actually valued at. Do I have to put on the balance sheet the price I have items online or can i do a retail value of item or can I include it as 0 (for the items i didn't pay for). 

Thanks.

[rocket2retro]

I am under the threshold. Can I claim deductions even if i am not paying tax?

Your biggest concern I'm guessing will not be that you will need to pay tax, but keeping your income down so that it doesn't affect your Centrelink payments.

You will use your deductions to keep your profit down eg If you sell $1000 and your deductions are $500 you will only need to declare $500 earnings.

There are a lot of things you can claim eg car (mileage), stock purchases, eBay fees, PayPal fees, refunds, ISP, power, phone, cleaning products, packing materials, accounting fees, etc etc, (even things you bought during the period but haven't yet listed or sold).

As mentioned an accountant will help you work these out (and may actually save you money in the long run).

[minimum_56]

I think you'll find with Centrelink - it's not 'profit' that will affect your payments...but income (regardless of any/all deductions)

[andrew0123]

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@minimum_56 wrote:

I think you'll find with Centrelink - it's not 'profit' that will affect your payments...but income (regardless of any/all deductions)

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Does that change with an ABN though?

[lyndal1838]

I cannot see how it would change with an ABN.....the only person who could tell you for sure is an accountant.

Please see one asap as it is obvious that you are well out of your depth here.

[daydreams_12]

If you dont get advise from a Accountant soon, you will find yourself in trouble with Centrelink and the ATO.  Never forget information is shared between govt depts on a regular basis.  Your sales from this month alone are quite numerous. 

People here have given you a lot of advice but majoirity have also said to see an accountant.  Every case is different.

[andrew0123]

Hi, another glitch. I have posted this reply for the second time but it will redirect back to the homepage and log me out of my account so sorry if this is a duplicate. 

Thanks for the help guys. I will be seeing an accountant. Have more questions relating to this but will ask them. I'm going to research some local accountants tonight.

[chameleon54]

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@andrew0123 wrote:

Hi guys. I am starting to make a profit over what i'm allowed to earn on my DSP; i'm on a centrelink disability pension and am preparing to hand in all the relevant forms. I am going to get an ABN, report every 3 months,

You only need to report every three months if you are charging GST on top of your selling price. There is no good reason to do this unless your turnover is over $75,000, under that figure and you are just making a lot of work for yourself and increasing costs to your buyers......Dont do it unless you are required to.

fill in a tax return and centrelink forms. Do you guys have any general advice? 

An accountant is a possibility

Probably essential given you are not familiar with the tax system. The advise given here is from other ebay sellers and only one or two are qualified accountants. ( and they rarely post here ) A few have also completed business studies which include taxation legislation.

but I also have some questions - I have receipts from online banking for petrol from 2014

An accountant can make an adjustment to your tax lodgements to reflect reciepts from previous years, but I would be suprised if it went beyond 12 months. There is no way you are going to be able to claim fuel expenses from 2014

when i found items in hard rubbish. These items were listed online from mid 2019. Some have sold and some are still listed online. Can I claim petrol deductions from online bank receipts

See ATO link below for Log book method of claiming car expenses. This is the most commonly used method for small business. 

https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/vehicle-and-travel...

and do i have to wait for each item to sell before I can claim? How do i calculate deductions when i have thousands of vastly different items and different travel times? I also buy and sell from op shops, cash converters and never kept physical receipts, but payed for most with online banking? I had never tracked any of this stuff until 2019 when i decided to sell it. 

Probably the easiest way to keep track of it is to start a record keeping book where you note date and location item was purchased, purchase cost etc. You can also use a reference number to alighn log entry with any reciepts. You can then also record the date and selling price once item is sold. This then becomes your main record keeping document, backed by reciepts, bank / paypal records etc.

As for stuff purchased in the past, if it was for your own private use and benefit you can sell it without needing to declare it. If it was purchased with a view to selling it at a profit, and you have not kept records, you have got a problem.  It may be best just to declare the whole lot as income without expenses. This is what I do. 

- how far back can i claim deductions? Can i value this at market price and claim a deduction based on it's value or cost to find or buy? 

I also have plenty of childhood football cards I want to sell which I payed quite a bit for as a kid - all my pocket money and I may not make a profit (no evidence or receipts of these purchases other than my brother/ parents vouching for it).  Can I claim any of this?

Its personal stuff so no you cant claim it, but you should not need to declare it as income either. It doesnt count as income or as part of your business.

Do deductions have to directly relate to a sold item. for example. If i found 100 items in hard rubbish and spent $4500 in petrol, can i claim all the petrol in the first year's profit and loss? 

It would depend on the results of your car log book entries as to how much fuel you can claim for business use. You can claim it for the taxable year it was used, regardless of when the item sells.

.

Also, with the balance sheet for inventory - I have my stock at very inflated prices because I’m not really ready to sell it. My overall inventory price is much higher than what it is actually valued at. Do I have to put on the balance sheet the price I have items online or can i do a retail value of item or can I include it as 0 (for the items i didn't pay for). 

You can do use either of the methods described above, but it has implications for the future including write offs for stock that proves unsalable, depreciation of stock that becomes obsolete etc. You also need to use the same method in future as you will be reguired to do a stock take each year and record the value of stock. Any increase in stock value can be considered taxable profit, any reduction in stock value a loss. Choose wisely

As others have mentioned you need to speak to an accountant and also centrelink. It would be unwise to earn enough that you completely lose your disability pension at this stage. Ebay sales are unpredictable and cant be relied upon as your only source of income. My best advice .........keep at least some of the disability pension for now and just see how things go.

Thanks.

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[tangledstitches]

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@chameleon54 wrote:

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@andrew0123 wrote:

Hi guys. I am starting to make a profit over what i'm allowed to earn on my DSP; i'm on a centrelink disability pension and am preparing to hand in all the relevant forms. I am going to get an ABN, report every 3 months,

You only need to report every three months if you are charging GST on top of your selling price. There is no good reason to do this unless your turnover is over $75,000, under that figure and you are just making a lot of work for yourself and increasing costs to your buyers......Dont do it unless you are required to.

I believe they meant they'd be reporting to Centrelink every 3 months, not to the ATO.

Stock on hand (inventory) is usually valued at cost.  There are several ways of doing this but you really need to speak to an accountant and/or do an accounting course.

[davewil1964]

Stock on hand (inventory) is usually valued at cost. 

...and is considered capital, not an expense until sold.

[andrew0123]

Thanks for your advice. I'm looking at getting a commissioner's ruling on declaring non-commercial profits. I still haven't read through the whole form and will look it over tonight.

https://www.ato.gov.au/Forms/Private-ruling---non-commercial-losses/

https://www.ato.gov.au/uploadedFiles/Content/CS_C/downloads/n5806-11-2014_js21554_fen.pdf

It was advise given on the ato forum (hobby or profit) to many who are in a similar situation of having expenses occured in prior years (still require an ABN). This would suit me greatly. Has anybody had experience with this?

I had a look for local accountants but yet to make an appointment and planning to do so when I've gone through some forms and better prepared. 

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@chameleon54 wrote:

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@andrew0123 wrote:

Hi guys. I am starting to make a profit over what i'm allowed to earn on my DSP; i'm on a centrelink disability pension and am preparing to hand in all the relevant forms. I am going to get an ABN, report every 3 months,

You only need to report every three months if you are charging GST on top of your selling price. There is no good reason to do this unless your turnover is over $75,000, under that figure and you are just making a lot of work for yourself and increasing costs to your buyers......Dont do it unless you are required to.

fill in a tax return and centrelink forms. Do you guys have any general advice? 

An accountant is a possibility

Probably essential given you are not familiar with the tax system. The advise given here is from other ebay sellers and only one or two are qualified accountants. ( and they rarely post here ) A few have also completed business studies which include taxation legislation.

but I also have some questions - I have receipts from online banking for petrol from 2014

An accountant can make an adjustment to your tax lodgements to reflect reciepts from previous years, but I would be suprised if it went beyond 12 months. There is no way you are going to be able to claim fuel expenses from 2014

when i found items in hard rubbish. These items were listed online from mid 2019. Some have sold and some are still listed online. Can I claim petrol deductions from online bank receipts

See ATO link below for Log book method of claiming car expenses. This is the most commonly used method for small business. 

https://www.ato.gov.au/individuals/income-and-deductions/deductions-you-can-claim/vehicle-and-travel...

and do i have to wait for each item to sell before I can claim? How do i calculate deductions when i have thousands of vastly different items and different travel times? I also buy and sell from op shops, cash converters and never kept physical receipts, but payed for most with online banking? I had never tracked any of this stuff until 2019 when i decided to sell it. 

Probably the easiest way to keep track of it is to start a record keeping book where you note date and location item was purchased, purchase cost etc. You can also use a reference number to alighn log entry with any reciepts. You can then also record the date and selling price once item is sold. This then becomes your main record keeping document, backed by reciepts, bank / paypal records etc.

As for stuff purchased in the past, if it was for your own private use and benefit you can sell it without needing to declare it. If it was purchased with a view to selling it at a profit, and you have not kept records, you have got a problem.  It may be best just to declare the whole lot as income without expenses. This is what I do. 

- how far back can i claim deductions? Can i value this at market price and claim a deduction based on it's value or cost to find or buy? 

I also have plenty of childhood football cards I want to sell which I payed quite a bit for as a kid - all my pocket money and I may not make a profit (no evidence or receipts of these purchases other than my brother/ parents vouching for it).  Can I claim any of this?

Its personal stuff so no you cant claim it, but you should not need to declare it as income either. It doesnt count as income or as part of your business.

Do deductions have to directly relate to a sold item. for example. If i found 100 items in hard rubbish and spent $4500 in petrol, can i claim all the petrol in the first year's profit and loss? 

It would depend on the results of your car log book entries as to how much fuel you can claim for business use. You can claim it for the taxable year it was used, regardless of when the item sells.

.

Also, with the balance sheet for inventory - I have my stock at very inflated prices because I’m not really ready to sell it. My overall inventory price is much higher than what it is actually valued at. Do I have to put on the balance sheet the price I have items online or can i do a retail value of item or can I include it as 0 (for the items i didn't pay for). 

You can do use either of the methods described above, but it has implications for the future including write offs for stock that proves unsalable, depreciation of stock that becomes obsolete etc. You also need to use the same method in future as you will be reguired to do a stock take each year and record the value of stock. Any increase in stock value can be considered taxable profit, any reduction in stock value a loss. Choose wisely

As others have mentioned you need to speak to an accountant and also centrelink. It would be unwise to earn enough that you completely lose your disability pension at this stage. Ebay sales are unpredictable and cant be relied upon as your only source of income. My best advice .........keep at least some of the disability pension for now and just see how things go.

Thanks.

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